NALA RAVINDRA R-EDDY v. INCOME-TAX OFI,-I

ORDER: (per Hon'ble Sri Justice Narsing Rao Nandikonda) Heard Mr.Thanneru Chaitanya Kumar, learned counsel for the petitioner, Ms.J.Sunitha, learned Junior Standing Counsel for the Income Tax Department for respondent Nos.l to 4 and Mr B. Mukherjee, learned counsel representing the Union of India for respondent No.5. Perused the record.

2. This is a writ petition where the proceedings are either challenged to the notices which were issued under Section 1484, and 148 of the Income Tax Act, 1961 (for short'the Act') orthe assessment orders those have been passed under Section 147 of the Act which have been assailed.

3. This writ petition is being taken up today only on one of the grounds, that the notices issued under Section 148A of the Act and the subsequent initiation of proceedings under Section 148 of the Act by the jurisdictional Assessing Ofhcer, whereas in terms of the amendment that was brought to the Income Tax Act by way 2 i.l.... of Finance Act, 2021 w.e.f., 01.04.2021 onward:;, proceedings under Section 148,4 ofthe Act as also under Secton 148 ofthe Act ought to have also been issued and proceedetl in a faceless manner.

4. The contention of the petitioner is that :he issue ol proceedings being in violation of the Finance Acr , 2021 i.e., the impugned notices under Section l48A and Section 148 of the Act not being issued in a faceless manner, have alreadv [-.,:en dcalt with and decided by this Court in the case of Ii,\NK-{NALA RAVINDRA R-EDDY vs. INCOME-TAX OFI,-I( lERr decided on 14.09.20D whereby a batch of writ petitions w,::r,j allowed and the procr:edings initiated under Section l48A as also under Section 148 of the Act were held to be bad with consequent al reliel's on the ground of it being in violation of the provisions o1'l>t:ction l51A of the Act read with Notification 1812022 dated 29.03 2t)22. The said judgment passed by this Cou( has also been subse cu r:ntly followed in a large number of writ petitions which were al1,rr,,ed on similar '[(2023) 156 taxmann.com 178 (Telangana)] .1 J

5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i.e', by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS2, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA3, Punjab and 'Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA4, and Telangana High Court in the case o[ SRI VENKATARAMANA RE,DDY PATLOOLA VS. DEPUTY COMMISSIONER OF INCOME TAX5 where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH VS. INCOME TAX OFFICE& INTERNATIONAL TAXATION6 which is again on intemational taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICERT, Gujarat High Court in the case of MANSUKIIBHAI 'pozql464 ITR 430 (Bom) '[(2024) 156 taxmann.com 478 (Gauhati)] 'l(2024) I 65 taxmann.com I l5 (Punjab & Haryana)l '12024) 167 taxhann.com 4l I (Telangana)l " 12024J166 taxmaruI-com 679 (Bombay)l '12024) 165 taxmann.com 113 (Himachal Pradesh)l 4 DAHYABHAI RADADIYA vs. INCOME T,A >i OFFICER, WARD 3(3X5)8, Jharkand High Court in the cait. of StIyAM SUNDAR SAW vs. UNION OF INDIAe, Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. ilr{COME TAX OFFICER & ANOTHER and batch of wrir pt.ti.ionsro which stood de<;ided oo 19.03.2024. Similar views have rrr.o been taken by the Division Bench of Calcutta High Court ir the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (M.A.T 1690 of 2023), decided on25.09.2024.

6. Even lhough the same issue having been dec c1 :d by a large number of High Courts, we are still confronted witi lrrge filing of identical matters on daily basis ranging between , to l0 writ petitions. That upon the instructions being sor- qlrt from the Department, they have been taking a solitary grorrnd that the decision rrf the Bombay High Court in the case <tf Heraware Technologies Ltd., (2 supra) as also the one ri,hir:h has been decided by this Court in the case of Kanakala Rnvlndra Reddy t2024 SCC Online Guj 4012 '2025 SCC' Online Jhar287 12023 : RJ-JD :49 g4-DB l o ' -) (1 supra) has been subjected to challenge in a Special Leave Petition i.e., SLP No.3574 of 2024 before the Hon'ble Supreme Court and the Hon'ble Supreme Court is seized of the matter In addition, there are about 1200 SLPs also filed arising out ofthe same issue being decided by various High Courts. 7 . To a query being put to the leamed counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon'ble Supreme Court in any of these matters pending before it. Meanwhile, fiesh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.

8. On the one hand, even though the order of this Cou( that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not frnd any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice under Section 148A and under Section 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concemed in the teeth of series of decisions 6 by all the nrajor High Cour-ts in India are cor-.tinuously still initiating proceedings under Section 148,4. of tlre .\ct and also initiating proceedings under Section 148 ol the Act in contravention to the amendments brought into the It:ome Tax Act pursuant to the Finance Act, 2020 as also the Financ:: .\ct 2021 .

9. Upon a query being put as to why can't this ,vrit petition be disposed of in the teeth of the decision rendered bv this Court in the case of Kunakala Ravindra Reddy (l supra), lcar.ned Standing Counsel lbr the Income Tax Department conterlds tlLar thosc would unnecessarily burden the Income Tax Departme r1 where they would bc required to file equal number of SLpr; before the Hon'ble Supreme Court and it would be further L,-rrclening the exchequer of the Union of India. It was also the ccetention of the leamed Standing Counsel that no prejudice would bc :aused to the interest ol the petitioners in case if this writ petition s kept pending till the linalization of the SLps pending beforc the Hon'ble Supreme Court and the fact that the petitioner is alre;rdy enjoying the benefit of interim protection. Nonetheless, on tl- e earlier query of this Court as to why the Income Tax Departmenr hirve not come out with a mechanism to issue appropriate instruct orls or to take 7 appropriate steps in ensuring that proceedings under Section 148,{ of the Act as also the assessment orders under Section 148 of the Act are kept in a hold in the light ofthe decisions dedcided by the various High Courts, it was submitted by the leamed Standing Counsel that the said steps can only be taken at the level ofCBDT as any such steps would have to be taken Pan India and cannot be limited to any of these jurisdictional High Courts.

10. As a result of which, what we are facing is steep increase of titigation day in and day out even though various orders have been passed by this High Court allowing writ petitions on the very same issue. The Income Tax authorities concemed are still even now in 2025 also initiating proceedings in contravention to the provisions of Section t51A of the Act and as a result by now, more than 600 to 700 petitions have been already got piled up before this High Court on an issue which otherwise stands squarely covered by the judgment of this Court in the case of Kanakala Ravindra Reddy (l supra). What is also surprising is the fact that though while allowing the writ petitions in the case of Kanakalu Ravindra Reddy (l supra), the Division Bench while reserving the right of the Revenue, has also protected the interest of the petitioners 8 insofar as the liberty which was granted to thr: Revenue for initiating fresh proceedings strictly in accordance witLr the amended provisions of the Act, as amended by the Finance Act,2020 and the Finance Act,2021 . The petitioner assessee would be entitted to challenge or raise the other legal objections if the R,:.\,enue initiates fresh proceedings. The Department has made no ;ndeavour in availing lhe said liberty that was reserved for the I(r:r:nue. On the contrary, thel,have been still sticking on to the strrrrd, which this High Court as well as many other High Courts alrr:a ly hetd to be 1 1. It appears that because of the aforesaid libert y that this High Court had granted permitting the Revenue for irLitiating fresh proceedings as a onetime measure in a facele:;s manner, the Income Tax Department wants to take advantage r. the same by protracting these proceedings which would enable tlrr,rn to meet the Iimitatiorr that would otherwise come in the way. .,j <ewise, if the writ petition is kept pending for a considerable lon1r .:reriod of time and finalty at a later stage if the Hon'ble Supreme C curt confirms the decision taken by this High Court as also by.tl-e other High Courts i n which the SLPs are still pending, th e Income Tax I 9 Department would get the advantage of the liberry that is otherwise protected in favour of the Revenue for initiation of fiesh proceedings from the disposal of these matters at a much later stage which would be advantageous and beneficial to the Revenue and would be equally disadvantageous and detrimental so far as interest of the assesses are concemed. As a consequence, the Income Tax Department gets an extended period of time for initiation of fresh proceedings.

12. The alarming trend of docket explosion in this Court, despite the clear precedent set it Kanakala Ravindra Reddy (l supra), is a matter of grave concern. The Income Tax Department's persistent initiation of fresh proceedings, disregarding the established judicial pronouncements, has led to an unprecedented surge in litigation with over 600-700 petitions piling up on the same issue. This deliberate approach not only undermines the principle of judicial precedent but also strains the judicial resources unnecessarily. The Department's strategy of awaiting the Supreme Court's decision on pending SLPs while continuing to initiate fiesh proceedings appears to be a calculated move to buy time and circumvent limitation periods, rather than adhering to the established legal 10 'lfi": l t position. Such conduct raises serious questi( nri about the administrative efficiency and the respecr lor judicial prorlouncements, particularly when this Court has a [r.,ady provided a balanced approach by preserving both the Revert:'s rights and assesses lnterests.

13. Another aspect which needs to be considered ir; that in fact it should hzrve been realized by the lncome Tax Deparlrrrent itself and should havc lound out via media in ensuring tlral proceedings under Sections 148-.4 and 148 should not have b,:cn issued in a faceless rnanner, at least till the Hon'ble Supreme ( c rrt decide the twelve hundred ( I 200) odd SLPs which it is alreacly s,:ized of or, at least the Income Tax Department should have [rund out some remedial steps to ensure that wherever the authcrities intend to initiate proceedings under Sections 148-A and 148. other than in a faceless manner, the proceedings should have treen delerred without precipitating the matter further intimating trt: assessee that they shall initiate appropriate proceedings only aflrr rhe SLp,s are decided by the Hon'ble Supreme Court on the t,,:rv same issue. This again, the Income Tax Department, has not be<,n able to give a convincing reply, except for the fact that such a der:ision if at all 11 has to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the leamed Standing Counsel for the Income Tax Department contended that the Dethi High Court dismissed a writ petition of similar nature, on the one hand when the High Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concemed at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-4 and 12 148 through the jurisdictional Assessing Officeruh::reas it ought to have been only in the faceless manner.

14. In the case of BANK OF INDIA vs. ,ISSISTANT COMMISSIONER, INCOME TAXll, on an issue rr'hether it was justifiable on the part of the Income Tax Dep rrrment in not following an order passed by the adjudicating authori:y only on the ground tirat the appeals are pending, the DivisiorL llench of the High Court o1'Bombay held at paragraph No.25 as r.n:ler, viz., : "25. [4r. Paridwalla has rightly drawn out atterrti:,n to the decision of this Court in Commissioner of lncome Tar: vs. Smt. Godavaridevi Sarafl2 as also the recent decision c. the co- ordinate Bench of this Court in Samp Furniture (p) [kl. v. lTO13 of which one of us (Justice G.S. Kulkarni) was a meml;er, wherein the (lourt categorically observed that the Revenue hrtving not "accepted'the Judgment of the High Court would not rre tn that till the same is set aside in a manner known to law, it wo.rl,: loose its bindi.1g force. Referring to the decision of the Suprer:r Court in Union of lndia vs. Kamlakshi Finance Corporation t-.td.14, the Court observed that the approach of the officials of R:,vsnus .1 treating decisions being "not acceptable" was criticzed by the Supreme Court. ln such decision, following are thr: relevant observations made by the Supreme Court. " 1{2025) 170 taxmann.com 422 (Bombay)l '' [978] l l3 ITR 589 (Bombay) " 7ZOZ41 [65 taxmann.com 581/300 Taxmat452 (Bombav) 'o 1t9921 laxrnann.com 16155 ELT 433 (SC) tL-- I l I I I I 13 "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assesbee was not tenable and that, if it was accepted, the Revenue would suffer, But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. lt cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasiiudicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellte Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. lf this healthy 74 rule is irui followed, the result will only be ,rrrlue harassment to assesses and chaos in administrzltion of tax laws.

12. We have dealt with this aspect at some l-.rr3th, because it has been suggested by the r€.a-led Add tional Solicitor General that the obserlal ons made by the High Court, have been harsh ()n the officers. lt is clear that the observalions of tho ligh Courl, seemingly vehement, and appi)r(: nfly unpalatable to the Revenue, are only intended tr ::urb a tendency in revenue matters which, if allovretJ to become widespread, could result in considerirble harassment to the assesses-public without any berrefit to the Revenue. We would like lo say th rt the department should take these observations 1 the proper spirit. The observations of the High C::urt should be kept in mind in future and the utmost .e:lard should be paid by the adjudicating authorities alcl the appellate authorities to the requirements of j'lcl cial discipline and the need for giving effect to the :rriers of the higher appellate authorities which are binrling on them." I 5. What rs worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure n,)t to generate further litigation on issues which have been laid tc rr:st by a large number of Fligh Courts all of whom have taken a (lc tsistent stand that the action of the Income Tax Department being vrolative of the ,,' 15 Finance Act,2020 and Finance Act,202l. Now, in orderto protect the interest of the Revenue as also that ofthe assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court

16. In the given lacts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter. ll . So far as the interest of the Revenue is concerned, we are of the considered opinion that the interest ofthe Revenue has already been considered and protected, as has been observed in paragraphs L6 | ..xi" ' 36,37 and 38 ofthe order which, for ready referenc:. is reproduced hereunder:

36. For all the aforesaid reasons, the impugned rrotices issued and the proceedings drawn by the resp(tndent- Department is neither tenable, nor su:;tainable. The notices so issued and the procedure adop.e: being per se illegal, deserves to be and are accorc,r,)ly set aside/quashed. As a consequence, all the in:ugned orders getting quashed, the consequential orders t)assed by the respondent-Department pursuant to thrr otices issued under Section 1 47 and 1 48 would z ls,r get quashed and it is ordered accordingly. The r€ar;on we are quashing the consequential order is on the 1;r- rcrples that when the initiation of the proceedings isr;lf was procedurally wrong, the subsequent orders zrls ) gets nullified automatically.

37. The preliminary objection raised by the petit )ner is sustained and all these writ petitions stands al eured on this very jurisdictional issue. Since the impugne I rrotices and orders are getting quashed on the p,, int of jurisdiction, we are not inclined to proceed furil- )r and decide the other issues raised by the petitioner which stands reserved to be raised and contend€d in an appropriate proceedings.

38. Since the Hon'ble Supreme Court had, in tf re case of Ashish Agarwal, supra, as a one-time mr.,asure exercising the powers under Article 142 tf the Constitution of lndia, permitted the Revenue to F oceed under the substituted provisions, and this Court aflowing the petitions only on the procedural flaw, .h:) right -------v L7 conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.

18. We would only further like to make observations that since we are inclined to dispose of the instant *rit peiition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (l supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024' preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP prefened by the Revenue against the decision of this High Courl in the case of Kanakala Ravindra Reddy (I supra). f This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue. lg. Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concemed. As a consequence, the impugned notice under challenge under Sections 148-4 and 148 stands set aside/quashed. 18 The consequential orders, if any, aiso stand set rr:;ir. e,/quasheri in similar terms as have been passed by this High Coul .n the case of Kankanala Ravindra Reddy (l supra). There shall t,: no order as to costs Consequently, miscelianeous petitions pendin,r. if any, shall stand closed /iTRUE COPY// SD/. h..{; REERAMA MURTHY ASS;I T NT REGISTRAR \ To, ) llin,*rt,onal S CTION OFFICER 1. The lncome tax offrcer ward 1, Nirmal NIRMAL, NlRt\4A,, Telangana, 504101, Telangana State. 2. The Prirrcipal Chief Commis-sioner of lncome Ta: Telangana and A.p Hyderab;rd lT Towers nC GulrOs ff,"rr"6'f"rnl Hyderabad_ S0OO28, Telangana a Faceless Assessment Center, lncome -,ax Department, New 4. The Cherirman, Central_ B_oard Direct Taxes, Dt:p,:rtment of Revenue. Firrance, covernment of rndia, secreirri".r r:uirdingi rrre,-o"er'rii'l fla'at51',' . The Union of lndia. Secrs[sry to the Government, Dr: ,artment of Revenue, Ministry of Finance. New Dethi _ i rb irol" '""' , Une CC Io SRI. GADI PRAVEEN KUIVIAR, DY.SoLICII ]R GENERAL oF rNDtA [OPUCI . One CC ro SRt. THANNFF!_J..C_ryA|JANYA KUIUAR A(,\,)care IOPUCI one cC ro r!4s J SUNITHA ttur.rion sc Fon*ii,itd[,r= iAil io."pu6i Two CD rlopir_.s BtV BGJP ,of . o 7 B q HIGH COURT DATED:2810412025 .-'.:, t' '' - ..\ ,.. / .:._ l. ..'.,, \.+\, ? 6 55P ;95 ', ',r . ORDER WP.No.31130 of 2024 ALLOWING THE WRIT PETITION WITI-] OUT COSTS